Deputy Finance Minister Jayant Sinha also told Reuters that the quarter-point rate cut would mark an “inflection point” after a period of high interest rates.

9:40 am Result poll: Tata Consultancy Services (TCS), the biggest software services exporter in India, will announce its third quarter earnings on Thursday. Profit after tax of the company is expected to increase 3.9 percent sequentially to Rs 5,496 crore on revenue of Rs 24,498 crore for the quarter, according to the average of estimates of analysts polled by CNBC-TV18. The growth in bottomline may be mainly due to other income, say analysts, who expect 2.9 percent quarter-on-quarter growth in rupee revenue, and 0.5 percent rise in dollar revenue at USD 3.948 billion (In Q3FY14, dollar revenue growth was 3 percent).

Dollar revenue growth in constant currency is seen at 2.5 percent in December quarter compared to 2.9 percent growth in constant currency in same quarter last fiscal.

9:30 am Reaction to RBI move: JP Morgan’s India economist Sajjid Chnoy feels the 6 percent inflation target of RBI is no longer in danger given the steep fall in global commodity prices, and back home, the decline in food prices. “The RBI will be data dependent; they will want real rates to fall below a certain level to keep a healthy rate of return,” he said in an interview to CNBC-TV18. Chinoy said the Budget now held the key to further rate cuts by the RBI.

“The RBI will want to wait for the Budget. The FY15 numbers are baked in the cake, there is little the government can do given the revenue numbers,” he said. “I think what the RBI will watch is what the FY16 Budget will look like? What is the medium term plan for consolidation, how will the government achieve that? We are looking at some cuts in March and April if these conditions are met,” he said.

The market is celebrating RBI’s surprise rate cut in style. The Sensex is up 566.65 points or 2 percent at 27913.47, after gaining almost 600 points in opening. The Nifty is up 147.65 points or 1.7 percent at 8425.20. About 574 shares have advanced, 84 shares declined, and 228 shares are unchanged.

All banks are up while SBI gained 5 percent. ICICI Bank, HDFC, Axis Bank and HDFC Bank are top gainers while Hindalco and GAIL are among the losers in the Sensex.

The Reserve Bank of India surprised the market by cutting repo rate by 25 basis points to 7.75 percent from 8 percent, with immediate effect, ahead of its policy review on February 3.

The Indian rupee gained 30 paise in the early trade. It has opened at 61.88 per dollar versus 62.18 Wednesday.

The dollar nurses losses, having retreated across the board after a surprisingly big fall in US retail sales pulled US yields sharply lower. Mohan Shenoi of Kotak Mahindra Bank said, “Global markets are swinging between risk-on and risk-off based on US data and growth/deflation scare. The dollar is showing mixed trends by holding stable against Euro while mildly losing ground to Yen and GBP. The USD-INR is expected to trade in a range of 62-62.30/dollar today.”

US markets saw a decline for the fourth straight day as December retail sales failed to meet expectations. The US 10-year treasury yield fell 6 basis points to 1.84 percent.European markets too closed with sharp losses. The FTSE was down 2.4 percent and CAC down 1.6 percent.

Asian markets are mixed in morning trade. Japan’s core machinery orders increased by a smaller-than-expected 1.3 percent for the month of November and the reading is significantly lower than a 5.0 percent rise forecast but an improvement from a 6.4 percent decline in October.

In commodities, crude prices surge, posting biggest one-day percentage gain in more than two years. Brent surges over 3 percent to trade above USD 48 dollars per barrel. And precious metal gold gain to USD 1230 an ounce but a rout in other commodities put some pressure on the metal.